Landowners in bushfire-prone parts of Victoria are welcoming a decision to change a policy restricting them from building homes on their own land.

The changes to the Bushfire Management Overlay (BMO) policy, which were announced by State Planning Minister Matthew Guy, will allow homes to be built on the affected land, subject to Australian building standards.

The BMO was put in place in 2011 after the Black Saturday bushfires to ensure houses built on bush blocks could be reasonably protected in the event of a fire.